A Comment -- General Comments From an Expert (A Commentary)

Take these pullbacks as opportunities to buy quality income or long-term growth stocks. History shows we go through cycles of troughs and peaks, but stocks rise long term. Don't chase or buy at once, though. Inflation is trending down, but still too high. So, interest rates will go higher. The inverted yield curve since June is a concern, because that indicates a recession 6-24 months later. Consumer savings built during the pandemic provides a positive cushion which will absorb higher food and energy costs. Also, the labour market is strong, but those savings won't last forever.

Still sees meaningful upside for Canadian energy stocks in the form of share buybacks and dividends. Recent USA SPR release to reduce gasoline prices is unsustainable. Financial demand for oil has fallen, even when physical demand has remained strong. Believes OPEC is looking to establish a floor price even with US SPR releases.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Oil prices have been showing weakness which initially eased investors' concerns, but the services sector continues to underpin the elevated inflation numbers. Bond yields are rising and the consensus is for the Federal Reserve to hike rates by 75 bps at its meeting next week. Still, markets have not made new lows and headline inflation is not accelerating, so we feel it is necessary to assess how the contracting economy interplays with the financial markets. Unlock Premium - Try 5i Free